10/13/2006

In November, 12 states have initiatives on the ballot that seek to protect private property against seizure and regulation

By Ben Arnoldy

A backlash among voters this November against an unpopular Supreme Court decision on eminent domain could dramatically curtail the ability of officials to manage growth and development in parts of the western United States.

Libertarian activists, tapping into voter anger as well as outside money, have helped propel property rights referendums onto 12 state ballots - making it the single biggest ballot issue this November.

Most of the measures aim to overrule a 2005 US Supreme Court decision that homes can be seized and handed over to private developers. But in some Western states, the eminent domain issue is coupled with other far reaching provisions that would force governments to pay landowners when regulations harm property values.

At stake is the momentum of "smart growth" planning in recent decades that has provided public interests like open space and environmental protection at the expense of private property owners. Supporters of the changes say they want those costs made transparent, while opponents argue that individual property rights, if unfettered, will trample on the rights of neighbors and the collective good.

"Urban growth boundaries, agricultural protection ordinances, wetlands regulations, historic district rules - just about any kind of land-use rule would be more vulnerable to litigation if the [regulatory takings] measures were adopted," says John Echeverria, executive director of the Georgetown Environmental Law and Policy Institute in Washington. "[The West] would be a lot more polluted, it would be a lot more congested, and it would be a lot less green if these measures were enacted."

Prior to the high court's decision on eminent domain in Kelo v. New London last year, Oregon, in 2004, enacted Measure 37, a law requiring local and state governments to compensate landowners when regulations decreased the value of their properties. Ballot initiatives in California, Arizona, Idaho, and Washington are loosely based on Measure 37. If governments cannot pay, some measures call for granting individuals exemptions from the rules.

In Oregon, the 2,446 claims already filed with the state would cost more than $5.7 billion to reimburse, according to the Department of Land Conservation and Development. None have been paid, says Michael Morrissey with the department. "Measure 37 didn't identify any new revenue source to pay for claims. So that means for those claims we judge to be valid, the issue is only waiver of regulation."

Such waivers have created some unusual dilemmas.

In Clackamas County, a landowner used Measure 37 to get a waiver for agricultural zoning restrictions that prevented a commercial gravel pit operation. One neighbor suddenly faced the prospect of a rock crusher just a few hundred feet from his home.

Another neighbor, an elderly couple trying to sell their adjacent farm, saw a $1.3 million offer collapse on account of the proposed pit, says their son, Scott Lay. He had voted for Measure 37, but now finds himself ambivalent. He warns voters in other states to "really consider how far that measure could extend into the property rights of the neighbor. The impact doesn't stop with that property, it extends beyond."

In another case, a pumice mine and power plant may be built inside Newberry National Volcanic Monument in Oregon if one longtime landowner gets his way.

"If putting up mining operations in national monuments seems too bizarre to contemplate, look again at Oregon because that's what [voters elsewhere] could get," says Bob Stacey, executive director of 1000 Friends of Oregon, a land-use watchdog group.

Supporters of laws like Measure 37 cite the Constitution's Fifth Amendment, which prohibits taking private property for public use without just compensation. Land-use restrictions, they say, unfairly "take" part of the property's value without paying the owner.

"By not compensating landowners ... you are essentially forcing a minority of landowners - the private property owners - to bear the cost of providing [a] public benefit," says Leonard Gilroy, a senior policy analyst with the libertarian Reason Foundation in Los Angeles.

In recent decades, land-use restrictions have burgeoned in many states as strategies to manage growth. Oregon stood at the forefront of that movement before Measure 37. Mr. Gilroy says the measure is an indication that urban planning isn't sustainable without incorporating property rights into the policy framework.

"Measure 37 was passed by the Oregon voters who still strongly support their state's system of land-use regulation. They've just realized that it's had these severe economic consequences on private property owners ... [and] they wanted to rebalance the equation," says Gilroy.

But critics of laws like Measure 37 argue that they create profound imbalances by putting the rights of a few developers over those of the great majority: homeowners. Zoning rules and other land-use protections, they say, protect the value of homes.

The court decision that evicted Susette Kelo from her Connecticut home has helped campaigners connect with voters.

"As soon as I brought up the little old lady in New London, Connecticut, it just clicked with everybody," says Eric Dondero, a libertarian Republican consultant from Texas who gathered signatures for Montana's 'Kelo-plus' ballot measure.

He received payments from an outside group chaired by New York City real estate magnate Howie Rich. "But there were a lot of people that wanted to read the whole wording and I said, 'Here it is.' And they would read everything."

Mr. Dondero says the regulatory takings aspect wasn't controversial for any of the voters with whom he interacted. But he did meet stiff resistance, he says, from local officials and other operatives whom he claims tried to physically block and intimidate signature gatherers.

Countercharges of signature-gathering fraud prompted a Montana judge to throw out the property rights ballot measure. Dondero denies that there were irregularities from his camp, noting also that out-of-state money was used to gather signatures for liberal measures. The case is under appeal.

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